This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GM Falls to 13-Year Low

"Domestic manufacturers have had an excess capacity problem, and they've been having a price war to keep volume up and protect share," Guziec said. " Ford (F - Get Report) has been more aggressively conceding share and shrinking. GM may be coming up against the point where they have to do that. I don't think that will force bankruptcy, but if this continues, they'll have to continue to shrink down to a more appropriate size."

GM's chief financial officer, John Devine, recently responded harshly to any mention of the "B-word," which has surfaced repeatedly in reference to GM lately, saying "the idea of bankruptcy is nuts."

"I think there's going to be a restructuring of North American operations with an aggressive cost-cutting program coming that will involve closing more plants and laying off more people," said Burnham Securities analyst David Healy. "They may even go back to the unions and try to get concessions on health care and other costs."

GM's previous first-quarter earnings guidance was based on North American vehicle production of 1.25 million. Since then, production schedules have been reduced by about 70,000 vehicles and pricing has become more competitive in North America.

GM also expects negative operating cash flow in 2005 of approximately $2 billion before charges related to its settlement with Fiat and the restructuring of its European division. It had previously targeted positive cash flow of $2 billion. The revision is primarily attributable to lower volume and decreased net income at GM North America.

Meanwhile, the company swims in a swamp of rising steel and fuel costs, shifting consumer attitudes and soaring legacy costs for pension and health care requirements that add a reported $1,850 to the cost of every vehicle made. Its $50 billion of corporate debt is currently rated at BBB- at Standard & Poor's, the agency's lowest investment grade level. Its debt is the second-largest component of the Lehman Brothers corporate bond index behind Ford.
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NSANY $17.07 0.00%
F $11.55 0.00%
GM $27.71 0.00%
TM $105.26 0.00%
AAPL $93.99 0.00%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs